Put down the 10-K filings and the stock screeners. It's time to take a break from the traditional methods of generating investment ideas. Instead, let the crowd do it for you.
From hedge funds to individual investors, scores of market participants are turning to social media and market data to figure out which stocks are worth watching. It's a concept that's known as "crowdsourcing," and it uses the masses to identify emerging trends in the market.
Crowdsourcing has long been a popular tool for the advertising industry, but it also makes a lot of sense as an investment tool. After all, the market is completely driven by the supply and demand, so it can be valuable to see what names are trending among the crowd.
While some fund managers are already trying to leverage social media resources like Twitter to find algorithmic trading opportunities, for most investors, crowdsourcing works best as a starting point for investors who want a starting point in their analysis.
So let's leverage the power of the crowd to take a look at seven of Wednesday's most active stocks.
- Nearest Resistance: $9
- Nearest Support: $8.60
- Catalyst: Merger Update
Leading off the list of heavily-traded stocks is drugstore chain Rite Aid (RAD) , a stock that's up 3.7% as of this writing on a merger update. Rite Aid is reportedly days away from closing its pending acquisition by Walgreens Boots Alliance (WBA) , a holding in Jim Cramer's Action Alerts PLUS portfolio. This deal is set to pay Rite Aid shareholders $9 per share.
Rite Aid is currently within 4% of that buyout price, on its way to close the gap to $9. Shares traded for as much as a 30% discount to the cash price as recently as November, but at this point, most of the money has been made on the Rite Aid trade. Markets are pricing in an 87% probability of the buyout getting done.